A Regulatory Tsunami for Pharma: Why Shorting Top Medicare Part B Reliant Stocks is a No-Brainer

The Storm Clouds are Brewing: MFN’s Existential Threat to Pharma’s Bottom Line

President Trump’s Most-Favored-Nation (MFN) Drug Pricing Policy, signed into motion on May 12, 2025, is no mere regulatory tweak—it’s a seismic shift targeting pharmaceutical giants reliant on inflated U.S. Medicare Part B drug prices. For companies like Johnson & Johnson (JNJ), Amgen (AMGN), and Biogen (BIIB), which derive 30–50% of revenue from Part B therapies (e.g., cancer drugs, injectables), this policy could slash prices by 30–80%, triggering a catastrophic collapse in profit margins.

Legal Repeats: Why This Policy Could Fail Like Its 2020 Predecessor

History is repeating itself. Trump’s 2020 MFN policy was struck down by federal courts for overstepping executive authority, violating Medicare statutes, and failing procedural requirements. The 2025 iteration faces the same legal minefield:

1. Statutory Limits: The Medicare Prescription Drug Improvement and Modernization Act of 2003 explicitly bars using international pricing to set U.S. reimbursements.
2. Procedural Flaws: The 2020 policy lacked required public comment periods and rulemaking steps. While the administration claims these have been addressed, rushed deadlines (e.g., finalizing a Center for Medicare Innovation model by April 2026) raise red flags.
3. Industry Litigation: Pharmaceutical giants like Takeda and Novartis have already threatened lawsuits, citing constitutional overreach and threats to innovation.

Investment Play: Short stocks with concentrated Part B exposure. The policy’s legal vulnerability creates a high-risk, high-reward shorting opportunity—especially if delayed implementation or court blocks trigger a “buy the rumor, sell the news” reaction.

Shorting Targets: Which Pharma Stocks Are Most Vulnerable?

Focus on companies with >25% revenue tied to Medicare Part B drugs and limited geographic diversification:

Company	Part B Revenue %	Key At-Risk Therapies	Short Volatility Opportunity
Amgen (AMGN)	40%	Neulasta (chemo support), Enbrel (rheumatoid arthritis)	High: 20% downside if MFN takes effect
Biogen (BIIB)	35%	Avonex/Tecfidera (multiple sclerosis)	Moderate: 15% downside, but litigation delays may cushion
AbbVie (ABBV)	28%	Humira (arthritis, psoriasis)	High: 18% downside; Humira’s biosimilar competition adds pressure

Market Overreactions: Exploit the Panic

Pharma stocks have already priced in worst-case scenarios, but the reality is murkier:

• The “30–80% Price Drop” Hype: Analysts question whether savings will materialize. Drugmakers may raise global prices to offset U.S. losses, or exploit opaque international pricing data (e.g., rebates, confidential deals) to avoid compliance.
• Short-Term Volatility: Expect sharp dips on policy milestones (e.g., HHS rulemakings, court rulings), creating buying opportunities for shorts.

Spillover Effects: Winners in the Wash

While MFN targets Big Pharma, it creates opportunities elsewhere:

1. Generic Drugmakers: Companies like Teva (TEVA) and Mylan (MYL) could benefit from lower Part B drug prices spilling over to generic markets.
2. Healthcare Providers: Medicare cost reductions might ease pressure on hospitals and clinics, boosting stocks like Universal Health Services (UHS).

The Bottom Line: Act Now Before the Storm Passes

The MFN policy is a high-risk, high-reward catalyst for shorting Part B-reliant pharma stocks. With legal challenges likely to delay or dismantle the policy, investors can capitalize on market overreactions to short AMGN, BIIB, and ABBV. Meanwhile, monitor the October 2025 HHS hospital survey deadline and April 2026 CMMI model rollout—milestones that could trigger volatility.

Investment Action: Short AMGN and ABBV with tight stop-losses. Pair with a long position in generic drug ETFs (e.g., PGM) for hedging.

The regulatory tsunami is coming—but for savvy traders, the waves are about to deliver windfall gains.